Think about why people file for bankruptcy, and what reasons come to mind first? Poor spending habits? Bad investments? Bad business decisions?
These things can and do play a role. But they are not the main reasons why people end up filing. The reality is that it’s a bit more innocent than that, and it’s something that people cannot really control.
According to one study, about 66% of those who file — two out of every three — noted that a key contributing factor was medical debt.
But don’t they have health insurance? That’s what many people ask, but researchers noted that it wasn’t that simple. Even those with proper insurance found that it did not always protect them from extravagant bills that caused them to run into financial distress. On top of that, everyone does not have insurance. Those who go without could face even greater risks.
One of the big issues here is that many of those who file did nothing wrong. They just got sick. Or they got into car accidents. Or they injured themselves at home. There are countless examples. Life took an unexpected turn and put them in the hospital. They got care — possibly life-saving care — but the result was that they left the hospital with more debt than they could handle.
On top of that, the injury or illness may have cost them a job or career, making things even more dire.
If this happens to you, it is crucial that you understand what bankruptcy options you have and how they can help you moving forward.